Forgive me if I don't know what I'm talking about...

I have a 1984 CB750 Nighthawk, and I'm trying to go on a roadtrip in late July, and last season my bike was burning a considerable amount of oil, and somehow I thought it would be something simple to bring into the shop and get it fixed (expecting a bill of around $1000 though).
I bring it in and they're saying that from the compression and leakdown test, that I am pretty much only powering the bike on one cylinder and the engine is pretty much hopeless and they quoted me ($3000-5000)
So I have three questions I guess...
1) Are they just trying to scare me off with a high price, and should I shop around?
2) If I were to find another compatible engine (or bike with compatible engine) what would I be looking for?
3) Should I just give up and buy another bike (and deal with the nighthawk later)?